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“Reasonable Surface Rights” Can Include Strip-Mining

“Say
what you mean, precisely, or a judge will decide what you meant #6”)

Typically, courts follow a
well-known principle of interpreting contract (or deed) language so as to carry
out the intent of the parties, when that intent is evidenced by the contract
language.

The problem, of course is
that it is the “trier of fact” (judge or jury) that determines the intent of
the parties within the four corners of a contract. Courts typically refuse to
consider extrinsic evidence of a party’s intent (offered by such party) if the court
determines the contract language is clear and unambiguous. Because of this deference to (how a judge or jury
interprets) contract language, sellers, buyers, tenants and landlords are
strongly advised to “say what they mean, precisely, or a judge will decide what
they meant”. Unintended results are often the norm for parties to a
contract, lease or deed who could have been a lot clearer with their language.

Failure of a
deed to clearly specify what constitutes (or what does not constitute)
“reasonable surface right privileges” in a reservation of mineral rights, for
example, resulted in a dispute recently decided by the Ohio Supreme Court (in Snyder v. Ohio Dept. of Natural Resources,
Slip Opinion No. 2014-Ohio-3942) that could easily have been avoided by
language to the effect “excluding
strip-mining.”

The basic facts of the case
are as follows: The state of Ohio and
the Ohio Department of Natural

Resources (collectively,
“ODNR”), bought a certain tract of land comprising approximately 651

acres, located in Brush Creek
Township, Jefferson County, Ohio from a seller who reserved all mineral rights
to the property, “including rights of
ingress and egress and reasonable surface right privileges.” Ronald Snyder
later acquired the mineral rights from that seller and then met with ODNR to
inform them of his desire to strip-mine the coal from about 10% of the acreage.
When ODNR refused to allow strip-mining on the property, Snyder filed a
complaint against ODNR seeking a declaratory judgment to the effect that the
“reasonable surface right privileges” language in the deed allowed them to
strip-mine a reasonable portion (10%) of the property.

ODNR argued, based on prior
case law that there must be a clear expression of the intent to reserve the
right to strip-mine in a mineral rights reservation. It reasoned that a
reasonable person could not construe the deed to allow total destruction of a
considerable portion of the surface through strip-mining merely because it
permits reasonable surface right privileges incident to mining. In other words,
strip-mining could never be a reasonable use of the surface because by its very
nature it destroys the surface.

Snyder argued that the deed’s
language is ambiguous as to what activity constitutes the exercise of
“reasonable” surface right, and accordingly, it should be allowed to present
its own evidence beyond the contract to prove that strip-mining the coal from
60 of 650 acres is reasonable.

The trial court ruled in
favor of the ODNR, Snyder appealed that decision and the Jefferson County (7th
District) Court of Appeals affirmed the trial court’s ruling. The case was then
appealed to the Ohio Supreme Court.

In a 6-1 decision, the Ohio Supreme Court
concluded that the contract (deed) between the ODNR and the mineral rights
holders did not exclude strip-mining as a method to extract coal from 10
percent of the Jefferson County property by use of the language “including…reasonable surface rights”. The
case will now be sent back to the trial court to determine the extent of
strip-mining that is reasonable, as required by the contract.

In support of its decision, the court
explained that it did not rule in prior cases that strip-mining, as a matter of
law was not a “reasonable surface right” (in spite of strong language in such prior
cases concluding that strip-mining “necessarily
and unavoidably causes a total destruction of the surface estate.” Rather,
the court reasoned it was merely interpreting the contracts at issue in those
cases that contained language “peculiarly applicable to deep-mining
techniques.” Citing language from one of such cases, the court stated: “the intent of the parties is controlling,
and * * * when deep-mining language is used exclusively, courts must assume
that strip-mining was not intended.” While the court did admit that
strip-mining is injurious to the surface of a property, it reasoned that “all
mining, whether deep-mining or strip-mining, damages the surface, and
strip-mining is not inherently more detrimental to the owner of the surface
interest, though some of [their] cases might suggest otherwise.”

The court distinguished the contract in Snyder as containing no language that is
peculiar to deep mining; therefore, the court concluded that the parties did
not intend to preclude strip mining by the use of the term “reasonable surface
right privileges.” Facts also important to the court were that strip-mining was well known in Jefferson
County when the contract was signed, and in fact, some areas of the property at
issue were strip-mined before the ODNR acquired it.Thus, according to the court “there is reason to believe that the
signatories to the original contract understood that ‘reasonable surface right
privileges’ included the right to strip-mine, and there is no reason to believe
that the signatories intended to exclude strip-mining."

In interpreting the ODNR contract (deed),
the court refused to acknowledge that the term “reasonable surface right” was ambiguous
“merely because different parties
interpret the clause differently.” Though the court concluded that strip-mining,
in general was a reasonable surface right
in this case (based on its interpretation of the contract), it did, however admit
that a determination as to the extent, duration and remediation of strip-mining
that was reasonable, was non-defined, and therefore the Ohio Supreme Court remanded
the case to the trial court for a determination of what is reasonable strip-mining.

What is the moral to this story? Say
what you mean, precisely, or a judge will decide what you meant. The Supreme Court of Ohio even agrees with
our moral/philosophy. As stated by the court in Snyder: “We are not persuaded that [the parties] intended the phrase to mean
nothing other than customary ingress, egress, and concomitant surface rights.
If they had, they would have used contract language that was normal and
customary for that purpose” In other words, if you don’t want a party you
have given mineral rights to, to strip-mine, clearly state that they cannot
extract any such minerals by strip-mining.

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